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Measuring and increasing the productivity model on


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B. BEŠKOVNIK: Measuring and increasing the productivity model on maritime...
Pomorstvo, god. 22, br. 2 (2008), str. 171-183 171

Bojan Beškovnik, Ph. D. Review article


Intereuropa, Globalni logistični servis, d.d., UDK: 621.869.8:656.615
Vojkovo nabrežje 32, SI-6000 Koper 65.012.4
Slovenija Received: 2nd September 2008
Accepted: 7th October 2008

MEASURING AND INCREASING THE


PRODUCTIVITY MODEL ON MARITIME
CONTAINER TERMINALS
The following article presents the possibilities of optimization on a maritime
container terminal, in order to increase the system productivity and optimize the
terminal capacity. Specifically this paper provides a perspective on maritime conta-
iner terminal productivity - how it is measured, the methodology of the measure-
ment used and the factors that affect the elements of productivity. Moreover, some
actions of the productivity improvement, which do not request special investments
and are under the control of planning service and its productivity specialists, are
described.
The management of a maritime container terminal is a complex process that
involves a vast number of economic and operational decisions. The management
must develop details and strategies on the measures of productivity and establish
an adequate decision support model to increase it. The proposed model facilitates
the adoption of new technologies and work rules on a long-term period but, at the
same time, enables the implementation of middle and short-term strategies that
improve productivity in a manner consistent with the fundamental interests of the
entire system. In this context, the paper proposes a special working place for the
productivity quality manager, which should develop different quickly adoptable
strategies and solutions. With its important planning role, this person can support
the terminal managers in the evaluation of the best development and optimization
decisions.

Key words: maritime container terminal, productivity, limiting factors, optimi-


zation model
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172 Pomorstvo, god. 22, br. 2 (2008), str. 171-183

1. INTRODUCTION

On a macro level, a maritime container terminal can be defined as a facili-


ty, which enables the transhipment of intermodal transport units or containers
between various modes of transport. The main focus is always on the seaside,
where sea transport represents the primary service of the system. In other wor-
ds, a maritime container terminal is a place where containers leave and enter
by different means of transport, such as vessels, trains and trucks; the terminal
is hence the basic intermodal node in the logistics network and for this reason,
all operations involved in the flow of containers have to be optimized.
The basic role of a maritime container terminal is the transfer and storage
of full and empty containers. As far as resource allocation is concerned, the
terminal can be interpreted as a system allowing container flows to be directed
from their sources to final destinations. From the economic point of view, the
system has the objective of maximizing the profit. In this respect, efficient con-
tainer handling at terminals is important in reducing transportation costs and
keeping shipping schedules. With the productivity optimization, a maximum
global productivity and an optimum operation of global supply chains can be
achieved.
For maritime container terminals, it is characteristically that a vast number
of different players have their own self-interests. On the one hand, terminal
operators would like to reduce the costs per unit handled in the port and to
obtain higher efficiency, and, on the other hand, a carrier strives to minimize
ship in-port time. Other subjects have their interests, which have to be conside-
red as well, because their decisions have direct impacts on the system produc-
tivity.
The performance of different maritime container terminals is determined
by different elements, which are changing continuously. A range of internal
and external factors influences the productivity of a maritime container termi-
nal as a system. In addition, very often the main problem of increasing produc-
tivity is the lack of balance between the capacity of different elements and the
disco-ordination in consecutive operations. An increase of efficiency of a con-
tainer terminal is mandatory to ensure sufficiently short lay time for container
vessels in the port and to achieve further reduction of terminal operating costs.
The management of a maritime container terminal must develop mechanisms
to measure productivity and to increase it without high financial investments.

2. CONTAINER TERMINAL PRODUCTIVITY

Due to the continuously increasing container trade and larger container


vessels, many terminals are presently operating at or close to their capacity. In
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addition, considering the trend towards larger container vessels, the pressure
on the seaside operations is higher than ever before. This is the reason why the
need for efficient terminal operations is more important than ever.
An efficient system is the one that performs a quick transhipment of conta-
iners to and from ships and the dispatch of containers by train or truck from the
system. The efficiency of a maritime container terminal mostly depends on the
smooth and efficient handling of containers. Handling systems and the auto-
mation level are the basic elements of productivity. There are four basic types
of container handling systems engaged in loading and discharging operations
at a maritime container terminal: berth cranes, chassis, straddle-carrier and
transtainer systems. The last one is the most popular in major intermodal ter-
minals as its characteristic renders possible higher container storage capacity in
the yard. Of course, special attention must be given also to the labour force, as
terminals still significantly depend on it.

2.1. The main impacts on productivity

At present, there are a variety of types of maritime container terminals


around the world differing in shape, layout, handling technology, automation
level, process organization, etc. Maritime container terminals also differ
between regions, countries and very often within certain countries. A typical
maritime container terminal consists of three subsystems: a berth, container
yard and delivery zone. Thus, they consist of several components, which have
different impacts on the productivity of the entire system:
• A vast number of different berths with specialized berth cranes of diffe-
rent types,
• Loading and driving lanes for trucks, with different length and position,
• Transhipment zones with several loading tracks under gantry cranes,
• Loading/discharging tracks, capable of accommodating an entire train,
which differ in length and position on the terminal,
• Storage areas, with different shapes, technology and static capacity,
• Check in/out gates or entry points, etc.
The layout of a certain terminal has a very strong impact on the infrastructu-
re and suprastructure of different subsystems and on the entire system because it
determines the position of subsystems, connections between them, technology to
be used, etc. The layout of a terminal depends on different elements:
• Local availability of space, on the inland side as well as on the sea side,
• Rail and road regional and local network,
• Quantities of maritime and continental cargo flows,
• Technical concept of using the suprastructure of the terminal,
• Number of inland and maritime container terminals in the surroundings,
etc.
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Figure 1: Productivity elements at maritime container terminals


Source: Prepared by the author

2.2. Limiting factors

Factors influencing the system productivity can be divided into two main
groups, internal and external factors. Internal factors are most often under the
control of the operator and the management of the terminal. This group inclu-
des terminal configuration and layout, capital resources invested, development
strategies and labour productivity. The management of the terminal has an in-
fluence on these limiting factors but very often, certain decisions are not under
their control (expanding the layout over actual borders).
In the second group are external factors, which are beyond the control of
operators and the terminal management. This group contains trade volumes,
shipping lines calling the port and the ratio of import or export containers or
containers in transhipment. Some other external factors must be considered
too (the size and type of ships accommodated by a terminal, landside capacities
of rail and highway systems) because all these factors directly influence on the
terminal productivity.
The properties of a container can be analysed separately, as this is a cargo
unit and it is difficult to classify it under an internal or external limiting factor.
The size, weight, origin and destination port, cargo characteristics are all very
important factors, because they have impacts on the vessel stowage as well as
on determining a location in the container yard. In addition, internal manipu-
lations in the system, safety controls, time and type of dispatch are also directly
connected and have important impacts on the efficiency and productivity of a
single subsystem and of the system as a whole.
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Figure 2: Limiting factors at maritime container terminals


Source: Prepared by the author

2.3. External users’ expectations

Direct users of the system services also have impacts on the main activities
of maritime container terminals. These users are different external subjects,
with different expectations. In addition, their business depends on the terminal
efficiency and that is why the port management must consider their priorities
and needs. Surely, the most important external subjects are cargo owners, but
ocean carriers are the main business partners of a maritime container terminal
system.
The main impact arises from the opposite interests between the ocean
carrier and the operators. The ocean carriers insist on shorter dwell time for
their vessels, while, on the other hand, the terminal operator aims to achieve a
higher throughput with a less number of berths and manipulation machinery.
The decisions taken by the carriers have direct impacts on the system produc-
tivity and efficiency, because they can change the vessels and the timetable on
service, or even leave the port with just a few weeks pre-advice. This is the
power of ocean carriers, and that is why they are continuously pressing termi-
nal operators. They are measuring and valuing the competitiveness of maritime
container terminals through different measurements, but, most frequently,
they compare the berth productivity, the dwell time on berths and the waiting
time for a free berth.
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Besides ocean carriers, other business subjects are important too. These
are forwarders, shipping agents, global logistics companies, trucking compani-
es, etc. They all have the same expectations from the container terminal and
their decisions influence the system productivity as well. Of course, local exter-
nal subjects have essentially less influence on the operator’s business decisions
but their information is also very important to find optimum operational and
development strategies.

3. MEASURING AND INCREASING PRODUCTIVITY

3.1. Measuring productivity

A constant productivity measuring is of vital importance for the system. In


addition, simultaneous measuring can serve to find opportunities in develo-
pment and optimization. Container handling productivity is directly related to
the transfer functions of a container terminal, including the number and move-
ment rate of berth cranes, the use of yard equipment, berth and yard occupan-
cy, number of vehicles at the entrance into the terminal and the productivity of
workers employed at the waterside, landside and gate operations. The basic
working parameters of the terminal change continuously, and it is, therefore,
very important to check and adjust them frequently.
The process of productivity measuring is a complex process because diffe-
rent elements are in interacting relations and they have important impacts on
each other. For example, the terminal transhipment capacity is a decisive cha-
racteristic and it must be analysed in detail through various limiting compo-
nents, such as the infrastructure, terminal work process and organization, type
of intermodal services and customer’s characteristics. All these elements derive
from internal and external impacts, and if only one element changes, all other
elements perceive it directly.
For the origin-destination type maritime terminal, landside operations and
facilities are one of the most important factors of productivity. In particular,
the capacity and efficiency of terminal gates, railway connections and services
and road networks determine the performance level of the system. Conversely,
for transhipment ports, which are in most cases acting as hub systems, the wa-
terside operation of berths is one of the most important determinants of pro-
ductivity. Moreover, it is important to distinguish between net and gross pro-
ductivity, as net and gross productivity vary from system to system. If the systems
achieve the same gross productivity, there is no guarantee that the net produc-
tivity is at the same level, because the net time is the elapsed time minus the
time unable to perform operations (like shift breaks, weather conditions, etc.),
which differ from terminal to terminal.
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3.2. Increasing productivity

In a modern maritime container terminal, the most important problem is


the coordination between the loading and unloading operations of the vessels
and the storage of the containers into the yard. The transfer from and to the
gates for land transportation is also important for systems which represent the
entrance point for the hinterland. The stops at terminals need to be short, in
order not to prolong the total transport/transit times. This requires the em-
ployment of fast and sophisticated technologies, with high capacity and a low
cost per move as well as of skilled workers.
All these operations are usually subjects of optimizing analysis in the sy-
stem. Some solutions of optimization in a maritime container terminal can be
done without high port investments. These possibilities must be considered
firstly. On the other side, the use of new technologies requests more direct fi-
nancial investments but the impact on productivity is definitely greater. The
management of a maritime container terminal must decide which solution is
necessary to be performed first, in order to achieve the maximum handling and
transport productivity, and, at the same time, to maximize the profit. Certainly,
the management of a maritime container terminal prefers solutions of optimi-
zation, which can be achieved without high port investments and with results in
a very short period. Some of them are easily realizable, such as reducing the
container dwell time, reducing the distance between the berth and rail tracks
and extended hours of operations at the terminal gate.

4. MODEL TO IMPROVE PRODUCTIVITY

In order to measure productivity and to define the most suitable strategies


to increase the performance per subsystem, it is necessary that the manage-
ment of the terminal sets up its own model how to measure and improve pro-
ductivity. The easiest way is to have a certain number of specialists in the pla-
nning service, which are especially involved in daily measuring productivity
processes and, for this reasons, they have real time information for the best
solutions. The modelling productivity service should include three basic stages:
management level, strategic level and operational level.
The management level consists of long-term decisions regarding the termi-
nal layout, infrastructure and suprastructure of the subsystems, agreements
with ocean carriers, etc. The management of a maritime container terminal
manages this level and usually the planning service does not have the power to
influence such decisions. Of course, their proposals can be evaluated, but wit-
hout any guarantee to be applied as such.
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The knowledge and decisions of the planning service is the basis for the
second and third level. Specialists dealing with everyday productivity situations
must set up the strategy of improving the performance of the system bottle-
neck. The second level is, therefore, the strategic level and involves the mid-
and short-term actions regarding the use of available ground space, increase or
decrease in the number of working hours and shifts, the opening of additional
gates, etc. Meanwhile, the third level is the so-called operational level and con-
sists of daily and real-time decisions, which have direct impacts on productivity
and efficiency.

Figure 3: Productivity measuring and improvement model


Source: Prepared by the author

In order to manage and control productivity of the entire system, it is nece-


ssary to appoint a productivity quality manager. This function should coordina-
te the activities of all productivity specialists in the planning service and regu-
larly communicate with the management. The productivity quality manager
must get information from the so-called first management level, to be able to
coordinate strategies in the second and third level efficiently.

4.1. Setting different strategies

Searching adequate middle- and short-term strategies is a complex process,


especially in the systems, where an organic expansion is present because the
situations are changing very fast and it is difficult to measure the productivity
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efficiently. Anyhow, a productivity quality manager must establish tools and


processes to do it in the best possible way. With a detailed analysis of the actu-
al situation, it is possible to take different quickly adoptable solutions.
Some very common roles are valid for all maritime container terminals.
The efficient use of an available space in the yard relates to the number of full
and empty containers stored in a given area of the system. Improving the utili-
zation of a ground space typically reduces the operational accessibility to con-
tainers; that is, the ground space utilization and the container accessibility are
inversely related. The challenge is, therefore, to define the container accessibi-
lity in relation to the ground space utilization based on terminal operational
targets and unique physical characteristics.
The major factors influencing both the berth occupancy rates and the dwe-
ll-time are the same in all systems. The number and size of the arriving contai-
ner ships, configurations of the stowage plans, number of cranes, length of the
berth and navigation constraints are some of the factors, which limit the entire
system. The berth occupancy is usually based on the length of a container ship
and the time she spends at the berth. However, high berth occupancy may re-
sult in a congestion where container ships are queuing to be served, which wo-
uld lead to high turn-around times equating to bad service for container ships.
In most cases, the productivity quality manager cannot influence these factors,
and, therefore, must focus his activity mostly on operational elements.
In the operations theory, the crane productivity on berths depends on the
number of lifts per time unit per vessel in the system. The mentioned handling
rate is an indication of the crane operator’s efficiency and directly affects the
productivity of the entire system. This is also the most important performance
measure to a shipping line in rating a terminal; therefore, this is an issue for the
productivity quality manager to work on. Another closely related measure that
shipping lines use is the vessel turnaround time (the average time the terminal
takes to unload and load a docked vessel). As this is an operational activity,
which depends on actual decisions, the planning service and productivity qua-
lity manager should focus on it very carefully. Some easy and prompt actions
can be taken in this respect. For example, reducing the distance between berth,
yard and loading/unloading rail tracks could decrease the vessel’s dwell-time
and at the same time increase the efficiency of the terminal space use. Putting
the loading/unloading tracks directly behind the container yard or partly even
under the berth cranes could reduce the high number of moves per container
between unloading from a ship and loading onto the train or trucks. Certainly,
such decisions require financial investments but are very interesting where
some expansion is planned.
Another important measure, which does not require any investments, is the
container dwell time (the average time a container remains stacked on the ter-
minal and during which it waits for some activity to occur). The productivity
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quality manager can shorten the amount of free time allowed (the term “free
time” refers to the number of days a container can remain in the system once it
has been unloaded from a ship before charging a storage fee), in order to free
up the container storage space and to speed up the operational processes. Mo-
reover, the productivity quality manager can change the method of calculating
free time; especially where the free time for all containers counts when the last
one is unloaded from a ship even if the first container was unloaded a few days
before that.
The most important facility on the inland side of a maritime container ter-
minal is the gate entrance for the trucks and rail lines. The gate must be desi-
gned in such a manner as to provide the required number of lanes needed at
peak, or close to peak hours of the traffic volume for both directions (import
and export), and at the same time to provide economically an optimal gate
throughput. The productivity quality manager must find the exact balance, whi-
ch is possible with the use of new identification and information technologies.

4.2. Importance of labour productivity

Labour forces, or workers, are of great importance especially in the systems


where the degree of automation is low. This is valid for more than ninety per-
cent of all maritime container terminals in the world. Port systems in the USA
face big problems of labour forces every day as trade unions are very strong,
even on that level to obstruct the use of automation technology.
For the productivity measure, the gross labour productivity is more impor-
tant than the net one. The net labour productivity contains only man-working
hours, meanwhile gross labour productivity is a measure of a suprastructure
productivity, which is defined by the number of crane moves per person-hour,
number of trucks per gate entrance, number of containers per rail line, etc. It
has been acknowledged that, where terminals are operated under difficult la-
bour conditions and more restrictive regulatory, this has a direct impact on a
lower productivity or throughput per terminal space. Work and safety rules,
workforce motivation, training and handling equipment characteristics directly
influence gross labour productivity; therefore, the productivity quality mana-
ger should be focused on all these elements to find a balance between the labo-
ur satisfaction and the productivity.
Certainly, it is impossible to completely satisfy the needs of labour forces
and specially, because the question of money is not always present. However,
as the pressure of increasing traffic flows on maritime container terminals be-
comes stronger and stronger, the terminals are forced to increase the number
of hours and shifts that terminal gates are open. Terminal gate operations can
be expanded during the traditional workweek and for the weekends as well.
Gate hours are often a limiting factor because even though vessels can be un-
loaded 24 hour a day or 7 days a week, the flow of containers through the ter-
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minal stops in the container yard if the gates are not available to release boxes
to the carriers or consignees. The same situation is valid for rail lines, as in
most terminals the railway system does not work during weekends, especially
on Sundays.

4.3. Importance of investments on productivity

Substantial investments and improvements in both the physical capacity


and the operational efficiency are necessary to accommodate ever-greater vo-
lumes of containerized cargo. It has to be considered also that terminals often
have extremely long economic lives and only extremely limited alternative uses.
Within these characteristics, the most important economic aim or benefit of
investment in the ports is to reduce the ship’s turn-around time. In such inves-
tments, the economic principles embrace the technical ones, in the sense that
the minimum amount of productive resources should be used to fulfil the pur-
pose of the investment. For these reasons, the productivity quality managers
are under pressure to choose solutions where, with limited resources, they must
achieve maximum results. A special field is the economic improvement of the
terminal operations, where some indicators must be used constantly in order to
evaluate the improvement. One of them is the investment efficiency index, whi-
ch is defined as the rate between the resources invested in the system and the
productivity achieved with them. This index can be represented as the unitary
cost of the transport cycle (USD/cycle).
The total inactivity cost of equipments (i.e. the cost of equipment waiting)
is another indicator that also enables an optimum in the container handling
equipment. This cost can be obtained by adding the inactivity costs of the han-
dling equipment on the yard and berth and includes the fixed cost of purcha-
sing the equipment plus the operating costs (i.e. maintenance, fuel and labour),
which cannot be rejected during inactivity periods.
The basic criteria for an adequate investment are as follows:
• to choose between a range of projects proposed by the planning and de-
velopment office,
• to decide the most appropriate time of the projects proposed,
• to decide whether to renew the old equipment, to continue to use it, or
expand the facilities with a completely new equipment/technology.
The container terminal users feel the immediate benefits of such an inves-
tment immediately; meanwhile the positive returns for the investor are subject
to a time lag, emerging when the revenues start to exceed the costs. A time lag
period must be precisely defined in order to get real plans of the system finan-
cial revenue. Of course, all investment solutions must be a part of the inves-
tment and development strategy and terminal operators must have a clear idea
how to exploit new technologies and new solutions, enabling the entire system
to achieve optimal commercial results.
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182 Pomorstvo, god. 22, br. 2 (2008), str. 171-183

5. CONCLUSIONS

The main role of a maritime container terminal is the transfer and storage
of full and empty intermodal units or containers. The performance of maritime
container terminals is of crucial importance for ocean carriers and cargo
owners. An increase in the system productivity is mandatory to ensure a suffi-
ciently short lay time for container vessels in the port and to achieve further
reduction of the terminal operating costs.
For this reason, the management of a maritime container terminal must de-
velop mechanisms to measure productivity and to increase it when necessary. In
this paper a model is developed and proposed, which involves a special working
place for a productivity quality manager. This function has a special role in the
planning model that consists of three proposed levels. Each level deals with dif-
ferent time oriented strategies. The lower level is the operational level, which
includes real time actions and measures, in order to obtain a higher operational
productivity. With a correct application of the proposed model, it is possible to
control simultaneously the productivity of the infrastructure and suprastructure
of the terminal and find where and how to increase the productivity of the entire
system and to secure the desired optimization of the system.
The productivity quality manager must find adequate middle- and short-
term strategies. This person must establish tools and processes to do it in the
best possible way. With a detailed analysis of the actual situation, it is possible
to take different quickly adoptable solutions. Some of these solutions are pro-
posed in the paper, including the labour force productivity.
A special field of enhancing productivity is related to investments. Mariti-
me container terminals depend on substantial investments and improvements,
in both physical capacity and operational efficiencies. As the infrastructure and
suprastructure of a maritime container terminal are very expensive, the pro-
ductivity quality managers are under pressure to choose solutions where, with
limited resources, they must achieve maximum results.

LITERATURE
[1] Bielli, H., Boulmakoul, A., Rida, M. “Objected oriented model for container terminal
distributed simulation” European Journal of Operational Research, 2005, pp. 1-21
[2] Choi, Y. S.: Analysis of Combined Productivity of Equipments in Container Terminal,
Korea Maritime Institute, Maritime Review, Vol. 3, 2003, p. 57-80
[3] Chu, C., Huang, W.: Determining Container Terminal Capacity on the Basis of an
Adopted Yard Handling System, Transport Reviews, Vol. 25, No. 2, 2005, p. 181-199
[4] Dally, H. K., Maquire, F. J.: Container Handling and Terminal Capacity - Container
Handling and Transport, C S Publications Ltd, 1983
[5] Dowd, T. J., Leschine, T. M.: Container Terminal Productivity: A Perspective, Washin-
gton Sea Grant, University of Washington, Seattle, 1989
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[6] Franke, P., Alicke, K., Arnold, D.: Modeling and optimization of the intermodal ter-
minal, IHL, Universitat Karlsruhe, Karlsruhe, 2001
[7] Le-Griffin, H., Murphy, M.: Conteiner Terminal Productivity, Department of Civil
Engineering, University of Southern California, Los Angeles, 2006
[8] Rizzoli, A., Gambardella, M.: The Role of Simulation and Optimisation in Intermo-
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gano, 2002

Sažetak

MODEL MJERENJA I POVEĆANJA PRODUKTIVNOSTI U


LUČKIM KONTEJNERSKIM TERMINALIMA

Ovaj članak predstavlja mogućnosti optimizacije na lučkom kontejnerskom


terminalu u cilju postizanja povećanja produktivnosti sustava i optimiziranja ka-
paciteta terminala. Članak posebno prikazuje pogled na produktivnost lučkog
kontejnerskog terminala; kako se produktivnost mjeri, metodologiju mjerenja i
faktore utjecaja na elemente produktivnosti. Nadalje, opisane su akcije za pobolj-
šanje produktivnosti, koje ne zahtijevaju posebna ulaganja i pod kontrolom su
planske službe te specijalista za produktivnost na terminalu.
Upravljanje lučkog kontejnerskog terminala je kompleksan proces, koji uklju-
čuje velik broj različitih ekonomskih i operativnih odluka. Menedžment mora ra-
zviti elemente i strategije mjerivosti produktivnosti i uspostaviti adekvatan model
odluka za njezino povećanje. Predloženi model olakšava upotrebu novih tehnolo-
gija i radnih pravila na duže vrijeme, ali istodobno omogućava implementaciju
srednjoročnih i kratkoročnih strategija, koje poboljšavaju produktivnost na način
koji je sukladan s ključnim interesima cijelog sustava. U ovom kontekstu, članak
predlaže specijalno radno mjesto za menedžera kvalitete produktivnosti, čija je
svrha razvoj različito brzo upotrebljivih strategija i rješenja. Sa svojom značajnom
ulogom u planiranju, takva osoba može dati potporu menedžmentu terminala u
evaluaciji najboljih razvojnih i optimizacijskih odluka.

Ključne riječi: lučki kontejnerski terminali, produktivnost, limitirajući faktori,


model optimizacije

Dr. sc. Bojan Beškovnik


Intereuropa, Globalni logistični servis, d.d.
Vojkovo nabrežje 32
SI-6000 Koper
Slovenija

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